TICKY FULLERTON, PRESENTER: Telstra is the first annual result for the telco's new chief financial officer Andrew Penn.

The former Chief Executive of AXA Asia Pacific and many feel could take the top job at Telstra. We caught up earlier.

Welcome to the program, Andrew Penn.

ANDREW PENN, TELSTRA: Thanks Ticky.

TICKY FULLERTON: Nearly 4 million mobile customers now and you're investing a slug of cash, I notice, over the next two years to bring forward the 4G mobile network. I know you're reluctant to give forecast growth numbers but do you see Telstra growing market share here considerably

ANDREW PENN: Our aspirations are to continue to grow our market share. We think we can outperform the market. As you've said, we had big gains over the last couple of years. I'm not sure it is reasonable to expect we'll get the same level of growth. That's why we're investing in the network. There's absolutely increasing demand for data, for downloads, that's why we're rolling out the 4G network, that's why we're accelerating it.

We're investing $1.2 billion in 2013 in our mobile network and customers are willing to pay for that because it is a great service.

TICKY FULLERTON: It seems that delays in the pace of the NBN rollout are not really going to affect you. The market views I think your capital management as quite cautious. Is this because you're driven by a likely change in broadband policy should the coalition win next time around?

ANDREW PENN: No. Our capital management approach is one of being prudent and cautious and thinking carefully about where we're going to invest the money. We indicated in April that we would expect to have excess capital by the end of June of between half a billion and a billion. It is transpired to be at the top end of that range.

We made a decision we're going to invest a proportion of that in further extending our LG network as I mentioned a moment ago.

TICKY FULLERTON: I was going to say if there was any change in broadband policy, it would likely be on the upside to Telstra, wouldn't it, given the deals that you have made?

ANDREW PENN: Our philosophy is that it is not really for us to comment on policy. We're very pleased and would like to work with whatever government to provide the best outcome for that government, for Australians, for our customers and our shareholders. We are really not going to be drawn into any discussion other than that.

TICKY FULLERTON: I imagine you have a personal interest in any Asian expansion given your experience at AXA Asia Pacific. I find it quite difficult to make sense of Telstra's Asian strategy. There seems to be some sort of refocusing in China. You've got integration of reach. You can tell me about that strategy?

ANDREW PENN: Absolutely. I would love to. As you say, Asia is a part of the world I'm very passionate about. In China we've basically re focused our media assets. We have interest in Auto Home, which a great business. That's very clear and distinct.

Across the rest of Asia we have a very successful mobile business in Hong Kong, leveraging off our mobile and engineering expertise out of Australia and in fact in Hong Kong that business we added another half a million new customers in 2012 and grew revenue on a local basis by 10 per cent.

Business is going really well. The third platform to our Asian strategy is our international connectivity business where we've got a substantial network of underground, of submarine cable network and infrastructure and we're going to use that off which to build our network applications services business which we're billing here domestically in Australia to extend that into the Asian region. We see strong growth opportunities in the Asian region, overall the portfolio grew 7 per cent this year but we look to continue to invest and grow that business.

TICKY FULLERTON: Can I turn to Foxtel because you are on the board of Foxtel there. The comment has been made more than once how savvy Kim Williams was with his Austar deal in terms of News Corp preventing Telstra buying Consolidated Media.

If News Corp does take over Consolidated Media, is there a lot of potential for the two players, News Corp and Telstra to extract more from Foxtel, do you think?

ANDREW PENN: We're very pleased with our investment in Foxtel. It is a great business and we were very pleased to support Foxtel in acquiring Austar to further strengthen its position and provide a broader service and a better service for customers right across Australia.

As regarding the shareholdings, our position is very clear. It is an independently run business. I'm on the board but there's a local management team and we're very happy working with the shareholders, whether they're News Corp, CMH, or the current structure or our new structure.

TICKY FULLERTON: Two shareholders at Foxtel presumably would give you an opportunity to look at things quite differently?

ANDREW PENN: No. As I say, we view Foxtel very much as an independent business with a very solid strategy. We're happy to support that strategy and its run very separately and independently.

TICKY FULLERTON: You've got I think about 3 billion of debt maturing next year. Do you see that as a straight forward sort of refinancing in this climate? What markets would you look to?

ANDREW PENN: Yes. We do. Part of the reason that we do is that we're quite considered and we've planned for this. We've actually pre-funded quite a bit of that debt. We actually already have $4 billion of liquidity as at the 30th June. We would be looking to raise money probably in the second half of this year and then again early next year. We had a very successful debt raising in Europe in March of this year where we raised 1 billion Euros which was heavily oversubscribed and the US market is attractive as well.

TICKY FULLERTON: The risk of climate has been made for the stock as a yield stock. You're focused on dividends. Do you see those dividends, franked dividends, going much higher. Probably not before 2014 I understand?

ANDREW PENN: We've already made, declared our dividend obviously in relation to 2012. We've given guidance in relation to 2013, understandably, as you would appreciate, we wouldn't give a guidance beyond that, but I think the core point would be I think that our strategy is working. We're delivering good returns for shareholders. We're growing our business, growing market share in most of our business, we're growing top and bottom line. If we can continue to do that we'll have the options to give more value shareholders in a number of different ways.

TICKY FULLERTON: You're not even a year into the job yet. Is it a very different world, telcos, different from pure finance?

ANDREW PENN: Yes, of course it has its differences and similarities. It’s a fascinating industry, it’s a tremendously exciting place to work. Australia should be proud. Telstra is holding its own in a global sense and very much the benchmark against global telcos.

TICKY FULLERTON: And then of course you've got those fabulous gadgets. Andrew Penn, thank you very much for joining us.

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